Strict regulations behind a low number of RIAs in India: Tuhin Kanta Pandey

High entry barriers and challenges faced by registered investment advisors (RIAs) are among the factors keeping people from taking up the profession in India, said Tuhin Kanta Pandey, chairperson, Securities and Exchange Board of India (Sebi), on Saturday.

Though the capital markets regulator has rationalized RIA regulations, the current rules still make it difficult for RIAs to operate daily, the Sebi chief said at the Mint India Investment Summit and Awards 2025 in Mumbai.

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He gave the example of performance monitoring. “RIAs can’t do performance monitoring unless they come up with performance evaluation metrics validated by a group.”

Pandey said it is a concern if an RIA has over 10 years of experience but is prevented from displaying it in any manner. How do RIAs get recognized for their work? Moreover, they’re being compared to newcomers rather than being recognized for their prior work, he added.

To be sure, RIAs can't show their performance for the last one year. They can show returns for a period of more than a year.

There are around 1,300 RIAs in the country, based on industry estimates.

Pandey also said another issue is educating people. “Whether they’re willing to pay for advice. To some extent, a lot of Indians prefer free services. Free advice can sometimes create problems because, ultimately, these should evolve into paid businesses,” he added.

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RIAs have been raising grievances over increased compliance burden and cumbersome processes, including being unable to show their performance.

According to Sebi, RIAs have to take prior approval from BSE Administration and Supervision Ltd (BASL) and pay a ₹3,000 fee in the case of individual RIAs and ₹6,000 if it concerns corporates each time a new advertisement has to be put out.

Advertisements refer to marketing content and all types of communications, ranging from circulars to newsletters to even any reference to past performance in any communication mode that can influence an investment decision.

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